USD/JPY: Downside alleviated on a breakout of 132.00 – UOB

Extra decline looks likely in USD/JPY while below the 132.00 mark, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘is likely to edge lower to 130.60, possibly testing the support at 130.20’. While USD weakened as expected, it did not test the support at 130.20 (low of 130.39). Downward momentum has waned with the rebound and USD is unlikely to weaken further. Today, USD is more likely to trade in a range, expected to be between 130.70 and 131.75.”

Next 1-3 weeks: “We have expected USD to weaken since the middle of last week. After USD dropped to 129.67 and rebounded strongly, in our latest update from Monday (27 Mar, spot at 130.70), we indicated “Further USD weakness is not ruled out but USD has to break and stay below 129.60 before further decline is likely”. Since then, USD has not been able to make much headway on the downside. Downward momentum is waning rapidly and the risk of USD bottoming is increasing. However, only a break of 132.00 (no change in ‘strong resistance’ from yesterday) would indicate that USD is not declining further.”